Economic and Project Analysis

Posted: April 2017
Oil Production Commentary, 2016
Next due: June 2017

Oil Production Increased 22.5% in 2016

Crude oil production was 76.7 million barrels in 2016 up 22.5% from 62.7 million barrels in 2015, as a result of increased extraction from Hibernia.

Hibernia’s total production increased by 50.7% (16.7 mmbbls) in 2016 to 49.8 million barrels. This increase was entirely due to higher production from the HSE Unit which increased from 1.7 million barrels in 2015 to 19.1 million barrels in 2016. Production from the main Hibernia field and AA Blocks declined marginally in 2016 to 28.3 million barrels (down 0.4 mmbbls) and 2.3 million barrels (down 0.3 mmbbls), respectively.

Terra Nova produced 12.1 mmbbls of oil in 2016, a decrease of 1.0 mmbbls (7.8%) compared to 2015. Production was constrained in the first half of 2016 by operational issues but production rates rebounded in July and August and have remained relatively steady since that time.

White Rose and its satellite areas (including North Amethyst) produced 14.9 million barrels in 2016, down 10.0% (1.7 mmbbls) from 2015.

The price of Brent crude oil, a benchmark for Newfoundland and Labrador oil, averaged US$43.67/barrel in 2016, down 16.5% from an average of US$52.32/barrel in 2015.

The estimated value of total oil production in the province increased by 7.3% to $4.4 billion as higher production volumes more than offset a decline in annual average crude oil prices.

The Department of Finance’s March 2017 forecast projects annual oil production to be 70.8 million barrels in 2017, down 7.8% over 2016 with lower production at Hibernia, Terra Nova and White Rose. Hebron, the province’s fourth stand-alone offshore oil project, is expected to commence production in late 2017.